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Stocks down 2% as markets digest latest bad news

June 01, 2012|By Andrew Tangel and Tiffany Hsu
  • Traders watch as U.S. stocks plummeted on disappointing employment and manufacturing figures.
Traders watch as U.S. stocks plummeted on disappointing employment and… (Richard Drew / Associated…)

Major U.S. stock indexes are down about 2% as traders reacted to a grim employment report and other negative economic news.

The Dow Jones industrial average plummeted 224 points, or 1.8%, to 12,170, erasing its gains for the year.

The broader Standard & Poor's 500 index was down 26 points, or 2%, to 1,284.

The tech-focused Nasdaq was down 64 points, or 2.2%, to 2,764.

The first piece of bad news came when the Labor Department said employers added just 69,000 jobs in May, less than half of what analysts were anticipating and the smallest gain in a year.

The unemployment rate rose for the first time in nearly a year, to 8.2% in May.

Then the Institute for Supply Management said its index of American factory activity came in under expectations, dipping to a level of 53.5 in May, from 54.8 in April.

On the plus side, the group's index for new orders showed a 13-month high. The Commerce Department showed construction spending rising. Though personal income growth lagged, consumer spending was up, according to the department.

But investors were spooked nonetheless. They fled to the safety of U.S. government bonds and gold. Treasury prices soared, sending bond yields down to record lows. The price of the haven precious metal jumped 3% to a morning high of $1,616.80 per ounce, after falling in recent weeks to the mid-$1,500s.

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